Nvidia stock falls on weak forecast; CFO says it would reduce hiring

Nvidia’s Chief Financial officer Colette Kress stated after the company’s fiscal first-quarter numbers were released on Wednesday that the business will slow its hiring and spend more carefully as it deals with a challenging macroeconomic environment.

Nvidia stock falls on weak forecast

The giant firm’s revenue and earnings surpassed analyst estimates, but the stock plunged more than 10% in extended trade when the chipmaker issued a cautious prediction for the upcoming quarter.

Nvidia’s revenue is likely to be approximately $8.1 billion in the latest quarter, falling below of analyst expectations of $8.54 billion. Investors are avoiding fast-growing equities in favor of safer options amid a period of rising inflation and macroeconomic instability, and Nvidia stock is down almost 43% so far in 2022.

In a statement, Nvidia CEO Jensen Huang said the company was experiencing a difficult macro environment. On a non-GAAP basis, the company’s operational expenses climbed 35% year over year to $1.6 billion.

Nvidia indicated that if the Russian conflict in Ukraine and Covid lockdowns in China had not happened, its revenue in the current quarter would have been $500 million lower.

Nvidia, on the other hand, continues to see significant revenue growth and strong demand for its graphics chips, which are widely utilized for advanced gaming and cloud artificial intelligence. Its total sales soared by 46% year over year, and sales in its major areas of data centres and gaming also soared.

Nvidia’s data center division, which sells chips to cloud computing businesses and corporations, rose 83 percent annually to $3.75 billion, outpacing the company’s main gaming division, which sells graphics cards for advanced 3D games and gained 31 percent annually to $3.62 billion.

Graphics cards for laptops and chips for game consoles, according to Nvidia, are driving gaming growth.

The firm also stated that inventory of its gaming graphics processors, which had previously been difficult to come by at retail prices, had normalised, indicating that the shortage is likely to improve. In the current quarter, Nvidia expects gaming revenue to drop sequentially.

The company’s smaller lines of business had mixed success. Professional graphics for computers climbed 67 percent to $622 million year over year, but the company’s automotive sector dropped 10% to $138 million.

Nvidia stated earlier this month that it had struck an agreement with the SEC over 2017 disclosures regarding how cryptocurrency mining fueled the company’s growth. The business stated said its cryptocurrency-specific solutions, CMP, generated a 52 percent drop in other revenue during the quarter, with revenue being minimal.

Nvidia said that its board of directors has approved an additional $15 billion in share repurchases through the end of the year. In the first quarter, it spent $2.1 billion on share repurchases and dividends.

Nvidia canceled a significant purchase of Arm, a microprocessor technology company, earlier this year. On a GAAP basis, Nvidia incurred a $1.35 billion termination penalty, resulting in a negative impact of 52 cents per share.

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